Innovation Studies An Introduction to the Main Issues

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1 Innovation Studies An Introduction to the Main Issues Jan Fagerberg, Ålborg Universitet, Universitetet i Oslo & Lunds Universitet Norwegian Research School in Innovation (NORSI), BI, Oslo September 24, 2012

2 The growth of the innovation literature Publications with Innovation in title, as a percent of annual additions

3 Joseph Schumpeter ( ) : Innovation as the driving force of economic and social evolution Central works Theory of Economic Development (1912/1934) Business Cycles (1939) Capitalism, Socalism and Democracy (1942) Central mechanism: technological competition

4 Schumpeter on technological competition But in capitalist reality as distinguished from its textbook picture, it is not that kind of competition that counts but the competition from the new commodity, the new technology, the new source of supply, the new type of organization ( ) - competition which commands a decisive cost or quality advantage and which strikes not at the margins of the profits and the outputs of the existing firms but at their foundations and their very lives. (Schumpeter 1942, p. 84)

5 Innovation: Some lessons from Schumpeter Perspectives on Innovation Introducing novelty into the socio-economic system (not only in theory but in practice) Making new combinations combining existing ideas, skills, resources in a novel way Breaking the routine, overcoming social inertia (role of entrepreneurs) Typologies of Innovation Type; product, process, supply, market, Organization Effect; Revolutionary (GPT), Radical, Marginal (incremental) Next: Some central insights (by way of example)

6 Innovation = uncertainty I think there is a world market for maybe 5 computers - Thomas Watson, IBM boss, 1943?

7 Theory & practice (or invention and innovation) Leonardo da Vinci Design for Flying Machine, c. 1488

8 Kline and Rosenberg (1986) it is a serious mistake to treat an innovation as if it were a well-defined, homogenous thing that could be identified as entering the economy at a precise date or becoming available at a precise point in time. ( ) The fact is that most important innovations go through drastic changes in their lifetimes changes that may, and often do, totally transform their economic significance. The subsequent improvements in an invention after its first introduction may be vastly more important, economically, than the initial availability of the invention in its original form (Kline and Rosenberg 1986, p.283)

9 Inertia at work: Xerox's Palo Alto Research Center (PARC) The Xerox Alto II XM Computer (1973)

10 Summary: Innovation Is highly uncertain (defies planning ) Takes time (long lags) Meets resistance. Comes in many different shapes, all of which matter.... And different sizes, Is everywhere (not only high tech )

11 Innovation Studies: A short history 50&60s: The linear model, science (R&D) as driving force, science policy, OECD starts to collect R&D statistics 70&80s: Increasing focus on technology as problem solver, technology policy (OECD and EC), firm & industry perspectives 90s and beyond: innovation attracts attention, socio- economic aspects (EU), system perspective, innovation policy, Eurostat collects innovation statistics, Innovation studies develops as new crossdisciplinary field with centres/departments, journals and meeting places (SPRU 1966, Research Policy 1971, Schumpeter Society 1986,TIM 1987, DRUID 1995, Globelics 2002 From a small activity in a few countries to a global movement (Fagerberg & Verspagen 2009, Fagerberg, Fosaas and Sapprasert 2012, Research Policy)

12 Innovation Studies: Top contributions No Author Country Title Citations Handbooks Citations (Journals) Before Rogers ( 1962) USA Diffusion of Innovations 14,1 204,3 2 Schumpeter (1934) Austria/ The Theory of Economic Development 14,1 56,3 USA 3 Arrow(1962) USA Economic welfare and the allocation of 10,5 26,0 resources for invention 4 Schumpeter (1942) USA Capitalism, Socialism, and Democracy 7,9 81, Nelson & USA An Evolutionary Theory of Economic 18,8 165,0 Winter (1982) Change 2 Freeman (1974) UK The Economics of Industrial Innovation 12,6 30,4 3 Pavitt (1984) UK Sectoral patterns of technical change 11,6 23,2 4 Freeman (1987) UK Technology Policy and Economic Performance 9,7 20, Nelson (1993) USA National Innovation Systems 15,7 61,0 2 Porter (1990) USA The Competitive Advantage of Nations 14,4 166,9 3 Lundvall (1992) Denmark National Systems of Innovation 13,4 59,3 4 Cohen & Levinthal (1990) USA Absorptive capacity: A new perspective on learning and innovation 11,9 124,3 Source: Fagerberg, Fosaas and Sapprasert (2012), based on references in Handbooks

13 Innovation Studies: Core contributors (Brackets: Fagerberg and Verspagen 1999, RP) Rank Name Country Total J-index Total ISI/year 1 (2) Nelson, R USA 37, (3) Freeman, C UK 35,5 88 3(5) Rosenberg, N USA 33,4 95,9 4(1) Schumpeter, JA USA/Austria 27, Porter, M USA 24, (9) Griliches, Z USA 24,2 93,7 7 Von Hippel, E USA 20,2 54,3 8(4) Lundvall, B-Å Denmark 19,1 76,9 9 (6) Pavitt, K UK 15,5 44,5 10 Chandler, AD USA 14,8 182

14 Central research environments

15 Disciplinary orientation of innovation literature users (journal citations) P e r c e n t

16 Some use it more than others Disciplinary Specialization (index, average = 1)

17 Central topics in innovation studies The making of innovations and its measurement Innovation systems A holistic understanding is a challenge: The Oxford Handbook of Innovation (2005) The effects of innovation (on the economy, social and environmental change) Innovation and politics

18 The making of innovations The innovative firm: Schumpeter Mark I (small firms) and Mark II (large firms) (Freeman 1974) From organizational memory & routines (Nelson and Winter 1982) to dynamic capabilities (Teece et al 1997) Openness: Absorptive capacity (Cohen and Levinthal 1990), open innovation (Chesbrough 2003) and democratic innovation (von Hippel 2005) Path dependency & lock in (Arthur 1994) Further reading: Lazonick in Oxford Handbook and Teece 2010 (ch. 16 in Handbook by Hall and Rosenberg)

19 Measurement of innovation: From Patents and R&D statistics to the Community innovation Survey (CIS ) An innovation is the implementation of a new or significantly improved product (good or service), or process, a new marketing method, or a new organisational method in business practices, workplace organisation or external relations. (page 46)

20 Innovation Systems Popular folklore notwithstanding, the innovation journey is a collective achievement that requires key roles from numerous entrepreneurs in both the public and private sectors (Van de Ven et al. 1999, p.149) Technological and/or sectoral systems (Carlsson and Stankiewicz 1991; Malerba 2004) National systems (Lundvall 1992, Nelson et al 1993) Regional systems (Braczyk et al.1997) Issues in system analysis: Actors, links, interactions, borders, functions, feedbacks, path dependency and lock in? Further reading: Chapters by Edquist, Asheim/Gertler and Malerba in Oxford Handbook

21 Innovation effects: growth, employment and the environment Innovation, spillovers and economic growth (Verspagen in Oxford Handbook) Innovation, techno-economic paradigms and long waves (Perez 1983,1985, Freeeman and Perez 1988) Innovation, catch-up and development (Fagerberg and Godinho in Oxford Handbook) Innovation and employment (Pianta in Oxford handbook) Innovation and the environment? Is innovation always good?

22 Innovation & Politics From science to technology to innovation policy From the linear model (science drives growth) to a systemic perspective (Kline and Rosenberg 1996, Lundvall 1992) Outdated policy? The 3% target for R&D in Europe (Lisbon- Barcelona agenda). From an exclusive focus on manufacturing, product and process innovation and high tech to a broad perspective that includes organisational innovation, innovation in services, innovation in the public sector and innovation in developing countries Broad versus narrow approach to innovation policy: Policies that influence innovation versus policies created for that purpose Further reading: Chapter by Lundvall/Borras in Oxford Handbook

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